As Malaysia prepared to modernize its financial sector, a wave of corporate interest emerged in the country’s digital banking license program. Reports on June 23, 2021, indicated that SEA Ltd and Petroliam Nasional Bhd (Petronas) were among the organizations planning to submit bids for an advanced digital banking license.
The initiative, which allowed non-financial players to enter the banking market, was part of Malaysia’s broader strategy to keep pace with regional financial hubs like Hong Kong and Singapore. Other entities considering bids included Genting Bhd, YTL Corp Bhd, and the Sarawak state government. Malaysia’s central bank, Bank Negara, planned to issue a maximum of five digital banking licenses.
Final offers were expected by June 30, 2021, with the winners to be announced before the end of 2022. The COVID-19 pandemic had accelerated the shift toward digital transactions, prompting even traditional banks like HSBC Holdings plc to close some branches as part of their digital transformation strategies.
Some companies formed consortiums for their bids. SEA and YTL Corp confirmed they were working together on a joint offer. Ride-hailing and payments firm Grab Holdings Inc, along with Subway Bhd, also expressed interest.
Petronas aimed to focus on advanced Islamic banking services, partnering with a financial institution for its bid. Chua Zhu Lian, investment director of Fortress Capital Asset Management Sdn Bhd, noted that existing fintech companies would gain significant credibility from obtaining official bank status.
“Existing fintech companies will get a significant boost in their credibility to gain trust quicker from consumers with the official identity as a bank, as well as a legal licence to perform banking activities, which remain highly regulated in Malaysia,” he stated. Representatives of SEA, Grab, and the Sarawak state government declined to comment. YTL Corp and Genting did not respond to requests for input. The move followed a similar development in Singapore, which in December 2020 granted four digital financial licenses to Grab, SEA, Ant Group Co Ltd, and a consortium including China’s Greenland Financial Holding Group.
According to Bloomberg, those permits were the first of their kind issued in the Asian city-state. SEA, founded in 2009 as a web-based games portal, later expanded into e-commerce and financial services, developing brands including Shopee and AirPay.
The company has maintained a strong presence in Southeast Asia, with operations in markets such as Vietnam and the Philippines, and has expanded further into India and Latin America. The issuance of digital banking licenses in Malaysia was expected to increase competition and drive growth in the financial sector, allowing non-financial players to offer innovative services. The application process drew significant attention, with all parties awaiting Bank Negara’s decision on the winners.
The development positioned Malaysia to become a more prominent player in the regional financial services market.
